Select Committee on Science and Technology Written Evidence


APPENDIX 9

Memorandum from the Higher Education Funding Council for England (HEFCE)

INTRODUCTION

  1.  We welcome the committee's enquiry into this topic. The excellence and vitality of the UK HE and research base, including provision for teaching and research in scientific and technical disciplines, are crucial to maintaining a strong economy and an inclusive society. This is a highly developed, complex system which a number of key players—including schools, higher education, and employers and users of research within the productive economy, as well as government bodies—need to work in close interdependence towards shared aims. Any proposals for change within the system must recognise this complexity and fully reflect the tensions between the needs and priorities of the different stakeholders as well as changing patterns of employer and student demand. Our evidence below is based upon our analysis of the current situation and the evidence available to us, which may change as a result of further work that we still have in hand. In this context we have some reservations about certain assumptions underlying the committee's call for evidence, which we hope that their enquiry will expose to informed debate.

  2.  The role of the HEFCE is to allocate public funds, and to ensure that these are well used in support of government policy—notably as set out in the recent Science and innovation investment framework 2004-14. In reading our evidence it should be borne in mind that the Council is one of several major funding sources for HE; that HEIs are autonomous bodies, and we would consider intervening in their internal decisions only where there was an exceptional case in national policy or gross market failure to do so; and that we do not have planning powers to determine the exact shape and type of HE provision.

  3.  The issues raised by the committee do not apply only to science; and nor are they peculiar to the UK. (Note: in this evidence we refer to STEM disciplines—science, technology, engineering and mathematics.) Issues of student and employer demand, and the supply of student places and research output, arise in relation to a number of areas including for example modern languages. They can also be seen to arise in other developed countries, including across Europe and North America. Patterns of demand and provision vary over time, and between institutions and disciplines, and it is unlikely that possible action that may help in one area will be equally effective across the sector as a whole.

  4.  The following paragraphs deal in turn with the six points on which you invited evidence; we have taken the last two of these together.

HEFCE funding for research

  5.  Some key facts about the Council's allocation of grant for research are given at Annex A. The key aim of our funding for research is to promote the continuing excellence, responsiveness and diversity of the research base within HE.

  6.  The great majority of HEFCE funding is allocated to HEIs as a single block grant, and it is entirely for the HEIs to decide how to allocate this and the other resources available to them between disciplines and between activities within disciplines. We do not therefore see a direct linkage between our grant allocations and the financial viability of academic departments. In particular:

    —  Across the sector as a whole and for many HEIs, HEFCE grant is a minority element in their overall income. In 2004-05, HEFCE research grant represented 31% of the total research income for institutions in England (and was around a third of their research income in STEM subjects).

    —  HEIs at large are undertaking research activities of public benefit at a loss—taking into account their income from all related sources and the full economic cost of the work that this supports. This situation is not sustainable, and is being tackled in a number of ways including the recently announced increases in QR and in the proportion of project costs covered by grants from the research councils; and importantly, through a requirement in our financial memorandum with HEIs that they should ensure that the full cost of all of their activities is covered by their aggregate income stream taking one year with another. But institutions still have to take hard decisions about how best to use the resources available to them, and are generally not able to increase research activity in any field without making reductions in other fields of activity that their stakeholders would probably challenge.

    —  There is evidence that a somewhat less selective funding regime in other territories within the UK does not necessarily rule out the closure or rationalisation of academic departments; and within England a number of HEIs are able to maintain strong science departments with healthy demand from students (see below).

Concentration

  7.  HEFCE has no policy aim to increase the concentration of research funding; rather we have a policy of selective funding which rewards and fosters excellence (as judged by the Research Assessment Exercise [RAE]). We aim to ensure that the overall quality of the research that we support, and the competitive position of the UK research effort on the international scene, are maintained and improved. We remain committed to support research of the very highest quality wherever this is being undertaken within the HE sector. In our funding we therefore give the first priority to ensuring that we maintain our level of support to the most highly rated departments in all disciplines, and then support less highly rated work down the scale as far as resources permit.

  8.  The outcome of the 2001 RAE was a significant increase in the volume and proportion of research in departments awarded the highest ratings. This means that, in order to avoid reducing our unit funding to departments rated 5 and 5*, we no longer count departments rated below 4 in our research funding allocations (except for the "capability" funding noted below). This has not, however, meant that our funding is very significantly more concentrated. There are now 75 HEIs with at least one department rated 5 or 5*. Between 2001-02 (the last round of allocations using the 1996 RAE ratings) and 2004-05 (the current grant year):

    —  Total HEFCE funding for research in STEM increased by 18%

    —  Across all disciplines, in 2001-02 75% of our research grant was paid to 24 institutions and in 2004-05 75% was paid to 22 institutions.

  9.  We see no cause for concern at present about the number or geographical distribution of strong research departments in any of the main STEM disciplines. We do have some concern about the need to develop research capability in certain disciplines that were comparatively recently established—to which we give special support through a "research capability" fund of some £17 million each year, covering departments rated 3b or 3a in 2001. We are also working with the research councils to provide targeted support for research in strategically significant subdisciplines where current provision is judged to be vulnerable. In particular, we have launched jointly with EPSRC a Science and Innovation Awards Scheme to strengthen research provision in fields including chemical engineering and statistics.

  10.  The RAE panels in 2001 did not apply criteria of critical mass in judging excellence; but it is observable that across SET disciplines the smaller departments tended to get lower ratings. This suggests strongly that there is some connection between the size of a research unit and the capacity to achieve and maintain excellence, possibly related to the cost of maintaining and updating specialised equipment, and it may be that institutions need to find ways to work with this. We would be concerned if these pressures were to lead to many fewer departments than at present being active in research at the highest level in any discipline, or to the attrition of isolated research units of high quality in institutions with lower overall volumes of highly rated research. We are actively considering how best to work with the sector to safeguard such "pockets of excellence" and the diversity and vitality of disciplines overall. The change to quality profiles for the RAE 2008 will assist this; one approach may lie in identifying and supporting new models of collaboration between HEIs.

The implications for university science teaching of changes in the weightings given to science subjects in the teaching funding formula

  11.  Although fairly simple in concept, we understand that the teaching funding methodology can appear complex to those unfamiliar with its principles. This has led to unfortunate headlines about reductions in funding to science subjects which are seen to be without foundation once the funding method and outcomes are understood.

  12.  The change in weighting affects the relativities between subject allocations. Changing the relativities naturally has an effect on the base unit of funding used to calculate grant allocations. When the weighting for SET subjects was changed from 2 to 1.7, this led to only a slight shift in resource for these subjects of -3.4%. Moreover, the allocations made to HEIs included additional funding for teaching, meaning that overall grant for 2004-05 was allocated against a higher base. Taking this into account, the resource for SET subjects actually increased by 5.5%.

  13.  When considering the specific implications of changes in weightings for science subjects a number of points should be borne in mind:

    —  No institution had their teaching grant reduced as a result of changes in subject weightings.

    —  As indicated earlier in this document, we allocate recurrent funding as a block grant and institutions have considerable freedom as to how they distribute their grant internally to support their academic objectives. We do not expect institutions to allocate their teaching grant internally using the same approach that we have adopted for the sector as whole.

    —  The weightings are based upon our best observation of actual patterns of relative departmental expenditure within the sector, as returned to us through HESA by institutions themselves.

  14.  In the review of cost weightings which informed the 2004-05 grant allocation, we proposed a "split" in the science price group (price group B), with differential weightings for higher cost subjects and other science and laboratory-based subjects. In responses to the consultation a significant majority of institutions did not favour splitting price group B; and nor was this proposal generally supported by the broad science and engineering subject bodies, who perceived that science and engineering as a whole would lose out even if the high cost subjects gained. We will continue to monitor provision in the SET subject areas in case action to support these subjects, regionally or nationally, proves necessary; this is one of the actions we will take to support our advice to the Secretary of State.

  15.  Currently our funding method uses expenditure as a proxy for cost in each subject area. This is the best information available, but we are piloting a means of looking more closely at costs based on the TRAC methodology, and may use this information in making future allocations.

  16.  A description of the funding method and the detail behind decisions to change the price group weightings can be found at www.hefce.ac.uk under publication numbers 2003/42 and 2004/24. A further useful document for reference is publication number 2004/23 which describes the funding methods for teaching and research.

The optimal balance between teaching and research provision

  17.  In considering the balance between teaching and research provision we understand that the Committee seeks an "optimal" solution. We believe that this must remain a strategic and academic judgement for individual HEIs, and it is unlikely that a balance could be found that would be considered optimal for all partners. We feel it would be unhelpful to try to find a `one size fits all' solution. The issues relating to STEM subjects are highly complex, and we consider that a flexible approach, enabling HEIs to meet the demands of their various stakeholders, is more likely to lead to a successful outcome.

  18.  It is possible for departments to remain viable where the majority of income comes through teaching resource. For example, in 2003-04 there were some 42 departments of chemistry with significant student numbers. Sixteen of these do not receive HEFCE research funding, although they do earn research income from other sources.

  19.  A major factor affecting the viability of a teaching department is student demand. In his report SET for Success,[5] Sir Gareth Roberts makes the point that the primary driver in HE course provision is student choice. The report illustrates that the number of graduates in science and engineering has been increasing, but that this growth has largely been through increases in students choosing to study biosciences and computer science. In contrast, demand for physical sciences, engineering and mathematics is falling.

  20.  The recent UUK/SCOP report Patters of higher education institutions in the UK: Fourth Report shows that total enrolments in biological sciences have risen by 40% between 1994-95 and 2001-02. In computing science enrolments have increased by 82% over the same period. Enrolments in engineering and technology have fallen overall by 5%, and those to physical sciences by 8%. These percentages, based on large subject groupings, mask a changing profile with the disciplines themselves. For example, aeronautical engineering has seen an increase in enrolments of 67%, whilst metallurgy has dropped by 30%.

  21.  In attempting to meet these demand patterns and, perhaps more crucially, to stay abreast of the dynamic forces within subject disciplines themselves, HEIs are choosing to reorganise their academic provision to emphasise subjects at the cutting edge of research and to meet perceived changes in demand for teaching and research. A good example of this is the re-alignment of Chemistry within life or environmental sciences in a number of HEIs. For this reason, the closure of a department may not signal complete cessation of work in that area, since elements of existing provision in the discipline may be retained with a related department. This "transdisciplinarity" is vital to the ongoing health of subjects. It is important that the dynamism of subjects is not constrained by artificial single subject constructs, "frozen in time", when evolution is driving them towards greater interdisciplinarity.

  22.  We will continue our research into these factors to inform our advice to the Secretary of State on HE subjects or courses of strategic importance. It is, however, already clear that student demand is a complex issue bringing together a number of factors. We have recognised some of these in work in hand with the sector—for example, work to increase the science links to schools and colleges from HEIs, industry and scientific societies. We are undertaking a project with the Royal Society of Chemistry to raise the aspiration of school children, and are in discussion with other bodies including the Institute of Physics and the Royal Academy of Engineering about ways in which student demand for science and engineering courses might be stimulated.

The importance of maintaining regional capacity in teaching and research, and mechanisms to bring this about

(a)  teaching

  23.  The Secretary of State's letter of 13 December asked us to advise on where intervention might be required, and in what form, to ensure the continuing availability of higher education subjects and courses of national strategic importance. We are working on this—including through our review of teaching funding—but it will take a little while to assemble and review the relevant evidence and to draw conclusions on possible ways forward.

  24.  The Secretary of State has also asked us to look at the scope for involving HEIs more closely in regional skills strategies, and to work more closely with sector skills councils to identify both gaps and opportunities to which the sector should respond. We are taking this forward, and indeed are already working with partner bodies on some specific issues where significant localised gaps in provision have been identified.

(b)  research

  25.  Excellent and innovative research is increasingly a global business. We see limited value in debating the question how much research HEIs should be funded to undertake, overall and in particular disciplines, at below the national level. The main contribution of research to the economy, and the supply of highly skilled manpower, operate at that level. Moreover there are many fields of research activity in which it is more important to maintain one or two world class units nationally than to increase the number of smaller groups perhaps doing less innovative work, especially where costs are high.

  26.  We are already taking action to strengthen parts of the research base nationally where there is a clear justification for this and we have identified an appropriate mechanism:

    —  our funding for capability subjects noted above.

    —  Working with OST and the research councils to stimulate the health of science disciplines, we have launched the initiative with the EPSRC noted above and are discussing proposals for similar initiatives with other research councils.

    —  We welcome well framed proposals for projects to strengthen and update research provision—especially in collaboration between HEIs and in consultation with the RDA—for funding from our strategic development fund.

    —  The Science Research Investment Fund (SRIF), a joint DfES/OST programme, which we manage with input from the Research Councils, is helping HEIs to update their research infrastructure including in response to changing demands from research users and partners. The benefits and impact of SRIF were confirmed in a report on the evaluation carried out by JM Consulting in 2004.

  27.  There are certain regional elements to be considered in relation to the provision and impact of research within HE, especially in terms of promoting interactions between HE and smaller businesses. We do recognise that particular research units can make a contribution to their regional economy, and are working to encourage joint working between individual HEIs and the Regional Development Agencies in building and planning provision at regional level. But the proposition of a direct linkage between the location of centres of research strength and enhanced regional economic growth (sometimes referred to as "clusters") remains unsupported by clear evidence and requires further investigation. We plan to undertake some work on this. In the mean time we do not see the location of research activity as a key element in ensuring that people wanting to undertake postgraduate research degrees, or wealth creating bodies requiring specialised advice and support, have good access to suitable provision of high quality.

January 2005



5   SET for success: The supply of people with science, technology, engineering and mathematics skills: the Report of Sir Gareth Roberts' Review published April 2002. Back


 
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